The foreign corporation behind the alleged piracy website Megaupload.com recently failed in its bid to have criminal copyright charges dismissed on the grounds that it lacked a US mailing address and therefore could not be properly served service of process. See US v. Dotcom et al., No. 1:12-cr-00003 (E.D. Va. Oct. 5, 2012). In denying Megaupload Limited’s motion, a federal judge held that foreign entities cannot avoid US criminal prosecution by simply failing to obtain a US address.

As previously discussed by Arent Fox in Alleged Copyright Pirate Megaupload Cites Lack of Jurisdiction in “Incredible” Attempt to Dismiss Federal Charges, the US Department of Justice shut down Megaupload’s websites and seized more than $67 million of the company’s assets following the indictment and arrest of Megaupload’s owners in connection with their alleged operation of an organization dedicated to copyright infringement. In July, attorneys for the Hong Kong-based company argued that the court must dismiss the government’s charges because a foreign corporation without a US office is not subject to jurisdiction within the US.

In its highly anticipated ruling, the federal court found Megaupload’s arguments unconvincing, reasoning that “(i)t is doubtful that Congress would stamp with approval a procedural rule permitting a foreign corporate defendant to intentionally violate the laws of this country, yet evade the jurisdiction of the United States’ courts by purposefully failing to establish an address” in the United States. Rather, the court noted, it may be possible for prosecutors to prove that Megaupload is effectively an “alter ego” of one of the individual defendants, and thereby serve the Megaupload papers on that individual once he is extradited to the United States. For instance, prosecutors could ultimately serve the papers on the head of the company, self-described “Freedom Fighter” and German citizen Kim Dotcom, who is currently facing extradition from New Zealand.

Nevertheless, Megaupload’s attorneys are unfazed by the judge’s ruling and have vowed to continue in their attempts to convince the court to dismiss the case. Notably, the court’s opinion left open the possibility that it might dismiss the case at a later stage of the proceedings, reasoning that “it would be premature to dismiss the indictment at this time.”

Further developments in this case could have profound implications for both US copyright holders as well as the operators of foreign file-sharing websites. Any US company with substantial intellectual property assets should therefore pay close attention to the court’s treatment of the US government’s charges against Megaupload.

Arent Fox is continuing to monitor this case. Please contact Sarah Bruno, Anthony Lupo, Amy Salomon, or Anthony Peluso with questions.